Data released in the UK showed that the nation’s trade deficit widened more than expected for September amid weak demand from neighbouring nations. Meanwhile, the BoE left its monetary policy stance unchanged yesterday, in line with market expectations. Against this backdrop, investors will keep a tab on today’s speech by the BoE Chief, Mark Carney, to gauge if he offers any hints about delaying the timing of an interest rate increase.

The Euro received a blow against the majors yesterday after the ECB Chief indicated that policymakers are in agreement over the use of unconventional policy measures to deal with the region’s economic woes. Across the Atlantic, today’s labour market report will attract considerable market attention, given its influence on the Fed’s monetary policy.

Pound Sterling – UK Markets

Data just out has shown that trade deficit in the UK widened for September as subdued demand in the Euro zone weighed on the nation’s exports. Going forward, a speech by the BoE Governor, Mark Carney, is likely to attract considerable attention, especially amid uncertainty surrounding the timing of an interest rate rise in the UK. In the policy meeting yesterday, the BoE kept its key interest rate unchanged at 0.5% and held the size of its asset purchase facility at GBP 375 billion, in line with market expectations. Meanwhile, dovish comments by various BoE officials and recent mixed macro data in the UK have dampened hopes of an early interest rate rise in Britain.

The Pound gained ground against the Euro yesterday after the ECB hinted at more stimulus measures in the region. However, Sterling weakened against the greenback amid fading hopes of an early interest rate increase in Britain and encouraging US initial jobless claims data. Meanwhile, the NIESR indicated that the UK economy grew by 0.7% for three months ended October, unchanged from the growth posted for three months to September.

US Dollar – US Markets

The greenback is trading in a tight range against the majors this morning ahead of today’s official US labour market data for October. The report is anticipated to show that the number of job additions in the nation remained above the 200K mark last month. Traders will further scrutinise the report to gauge the health of the nation’s labour market, particularly after the minutes of the latest US Fed policy meeting indicated that slack in the job market is reducing at a healthy rate. However, market participants will keep a close watch on the nation’s labour participation rate, especially after it showed a downward trend in the last two months. Going forward, next week’s retail sales data in the US will be crucial in determining the direction of the US Dollar against its key peers.

Meanwhile, the greenback rallied against the Euro in yesterday’s trading session following the outcome of the ECB policy meeting. Additionally, data released in the US revealed that the number of first time jobless claimants declined more than expected for the previous week and remained below its pre-recession low.

Euro – European Markets

The ECB kept its key interest rate unchanged at 0.05% in yesterday’s monetary policy meeting, at par with market expectations. In the post-meeting press conference the ECB Chief, Mario Draghi, indicated that central bank policymakers stand ready to implement further stimulus measures, if needed. The comments by the ECB President shrugged off earlier reports which had indicated widening divisions among policymakers. The common currency lost ground against the greenback in yesterday’s trading session and slipped below the 1.24 mark amid rising expectations of the ECB unleashing aggressive monetary stimulus measures in the future to counter the region’s economic weakness.

Data released earlier today showed that industrial production in Germany declined less than expected, while trade surplus widened more than expected for September. However, the Euro showed little reaction to today’s German economic data. With the official US labour market report scheduled for release later today, traders in the Euro-US Dollar pair will remain on their toes.

Other Currencies – Highlights

The Aussie Dollar recovered some of its losses against the greenback in today’s trading session after slipping below the 0.86 level yesterday. The Trade Minister of Australia, Andrew Robb, assured earlier today that the Free Trade Agreement with China will not allow the nation to be populated with cheap labour from abroad. This eased some concerns among investors, especially after yesterday’s labour market report showed that the participation rate in Australia increased unexpectedly for October. Additionally, the report revealed that the number of job additions in Australia were stronger than expected last month. Separately, the Reserve Bank of Australia’s latest monetary policy statement released earlier today revealed that the central bank expects the nation’s economic growth to remain below trend until mid-2015.

With little on the domestic macroeconomic front, the Australian Dollar is likely to take direction from today’s US labour market report. Additionally, with Chinese trade data scheduled over the weekend along with next week’s consumer price inflation numbers in China, volatility in the Australian Dollar against the majors cannot be ruled out.